A former senior Chinese financial regulator has said top Beijing leaders set “psychological” targets for the nation’s stock markets and currency exchange rate that are not based on fundamentals. The comments to a seminar by Xiao Gang, former head of the China Securities Regulatory Commission, offer a rare insight into the often murky world of elite policymaking at a time when the Communist party under President Xi Jinping has been tightening control of the financial system.
“It wasn’t us who were worried; it was the senior leadership,” he said. The onshore renminbi was trading onshore at Rmb7.26 to the dollar on Wednesday. Beijing sees the exchange rate as critically important to its mission to develop China as a reliable trading partner, with numerous officials calling for a stable exchange rate against the dollar. Chinese authorities also see the country’s stock markets as both venues for corporate fundraising and important tools for maintaining social stability.